NNDNF - Nidec Has Attractive Drivers And Strong Technology But Profit Execution Has Been Notably Lacking
2024-06-25 11:23:08 ET
Summary
- Nidec's most recent quarter underlines its ongoing challenges hitting its own profitability targets, as the company took another large charge for its e-axle business.
- This year looks challenging, as Nidec prioritizes profitability in its e-axles business, Chinese BEV customer sales slowed, and other markets like appliances and industrial motors see softness.
- Nidec has opportunities in data centers and energy efficiency, as well as EVs, but hitting profit improvement targets is increasingly important for the stock.
- Nidec shares still look undervalued, and the EV business could scale up rapidly in 2026 and beyond, but margin shortfalls are likely to be punished more harshly going forward as investors lose patience.
The frustrating wait for consistent performance and growth from Japan’s Nidec ( OTCPK:NJDCY ) ( OTCPK:NNDNF ) (6594.TO) drags on, as the company has continued to have challenges in driving sustainable profitability in its still-emerging e-axle business, while also dealing with macro and forex challenges across much of the rest of the business. Although the company did about what I expected in terms of revenue and free cash flow in FY’24, core profitability remains a challenge as EBITDA came in almost 10% short and initial guidance for FY’25 was below expectations....
Nidec Has Attractive Drivers And Strong Technology, But Profit Execution Has Been Notably Lacking